RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/S/W/54 
3 October 2005 
 
 (05-4386) 
Council for Trade in Services 
Special Session Original:   English 
 
 
 
COMMUNICATION FROM THE EUROPEAN COMMUNITIES  
 
Implementation of the Modalities for the Special Tr eatment for Least Developed Country Members in 
the Trade in Services Negotiations  
  
 
 The following communication, dated 30 Sept ember 2005, from the delegation of the 
European Communities, is being circulated to th e Members of the Council for Trade in Services. 
 
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1. The Communication from the LDC Group (Job(05)/11 4) of 17 June 2005 set out a number of 
key questions to guide discussion of the implementation of the Modalities for the Special Treatment 
for LDCs in the Trade in Services Negotiations.  The response of the EC and its Member States 
(hereafter “the EC”) is set out below.  
2. The EC welcomes the Communication from the LDC Group and recognises the need to 
ensure that the modalities are effectively and cons tructively operationalised.  To this end the EC 
broadly supports the LDCs’ suggest ed way forward in terms of info rmation gathering and monitoring 
arrangements under the auspices of the Special Session of the CTS.   
3. The following addresses the questions raised by  the LDC Group in the order in which they 
appear in the paper. 
A. P
ARAGRAPHS 6 AND 9 OF THE MODALITIES : REALIZING LDC  EXPORT OPPORTUNITIES IN 
MODE 4. 
1. Where do initial and revised offers provide an y additional and commercially meaningful 
commitments for LDCs, particularly in Mo des 4 and 1? Members are invited to report 
on this. 
4. The EC’s initial offer included substantial co mmitments on Mode 4, which have been further 
extended in its revised offer.   
5. The EC’s offer on Mode 4 includes commitments  on Contractual Service Suppliers (CSS) and 
Independent Professionals (IPs), which respond to the re quests of LDCs to give particular emphasis to 
categories of service suppliers which are not linked to commercial presence.  Commitments on CSS have been offered in 21 sectors or sub-sectors,  including key areas of professional and business 
services, which enable suitably qualified personnel to travel to the EU to provide relevant services.  
Commitments on IPs have been made in several important sectors, including engineering services, 
computer services and management consulting, where the relevant professionals can provide services 
on a fees basis without any company affiliation.   TN/S/W/54 
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 6. The EC has also made a significant offer on graduate trainees, who can move as intra-
corporate transferees on management training programm es.  The graduate trainee programme is a tool 
that can be used to provide for technology or k now-how transfer for newly qualified managers in 
LDCs.  Commitments on graduate trainees have been made in nearly all sectors. 
7. In Mode 1, the EC’s offer includes significant new commitments on maritime transport which 
mean that LDCs have free access to the EU for their cargo and can thereby benefit from the wider 
trade opportunities and direct access to distri bution channels that flow from this.   
8. The EC has also offered Mode 1 commitments in  (among others) financial services, including 
data processing; computer services; postal and cour ier services; telecommunications; other business 
services, such as advertising, market research and management consulting; e nvironmental consultancy 
services; and tourism and travel-related services.  
9. Our extensive mode 1 commitments across a wide range of services sectors provide numerous 
business opportunities.  In particular, the combination of commitments in computer services, telecommunications and manageme nt consulting provide fully integrated opportunities for the 
development of outsourcing activities and for taking  advantage of the benefits of e-commerce which 
can play a part in the development of all sectors of the economy. 
2. How are categories of natural persons s upplying non-professional services being 
reflected in offers?  If not, how can we ensu re that they are reflected?  Could the use of 
ILO-ISCO classification be helpful?  
10. The EC’s offer does not extend to non-profession al (i.e. lower skilled) service suppliers.  
Generally speaking, most lower-skilled service provi ders do not provide services under contract or on 
a fees basis in the way intended by Mode 4.  Lo wer skilled workers generally provide their services 
by direct recruitment on the employment market.  In accordance with the Annex on Movement of Natural Persons Supplying Services under the Agreem ent, the EC considers that the GATS does not 
apply to measures affecting natural persons seeking access to its employment market.   
11. The EC favours the presentation of offers and schedules according to the common approach 
to scheduling proposed in the Communication by  the EC and others of 18 February 2005 
(TN/S/W/32).     
3. Have Members provided any targeted technical assistance, helping to identify sectors 
and modes of interest to LDCs?  Members are invited to report on this.  
12. The EC has provided targeted technical assistance to a number of LDCs.  We are able to do 
this in response to requests made by LDCs th rough EC Country and Re gional Delegations and 
through certain other facilities, such as those for the African, Caribbean and Pacific (ACP) States and 
the Asia Trust Fund.  However, in practice few requests for servic es sector assessments and similar 
technical assistance are received th rough these channels.  The EC would welcome further requests for 
assistance and urges LDCs to discuss the possibiliti es with its Country a nd Regional delegations. 
13. In order to directly address the need for targ eted technical assistance in services, the EC 
began in 2004 to work with the International Trad e Centre, providing funding for its Trade in Services 
Programme which works with the private sector a nd governments to carry out trade assessments and 
provide advice on negotiating strategy based on those asse ssments.  In 2004 five developing countries 
received support under this programme, two of which we re LDCs.  In 2005 a total of 11 countries, all 
LDCs, are expected to receive EC funded assistan ce under this programme amounting to €300,000.  TN/S/W/54 
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 14. The EC also provides broader development assistance relating to trade in services.  This 
includes supply-side assistance and support for regulatory systems and infrastructure development.  For example, the EC is assisting one LDC to develo p its financial system and another to develop its 
ports as part of a national transport policy to improve  access to markets.  Assistance of this type can 
amount to several million euros for individual projects.  
15. A number of EC Member States have also provided relevant assistance.  These include 
capacity building projects and impact assessments, of ten in collaboration with organisations such as 
UNCTAD, the World Bank, the International Centre  for Trade and Sustainable Development, and 
often with a strong focus on LDCs.  
4. Irrespective of any specific requests, what do Members consider as comprehensive and 
meaningful (market access and national treatment) commitments?  What are the 
commitments they can make for LDCs in Mode 4?  
16. The EC would like to see commitments made by all Members that increase trade and promote 
development.  As indicated above the EC believ es that its offer on Mode 4 takes account of the 
interests of LDCs. 
5. How can negotiations for future disciplin es on domestic regulation adequately 
incorporate LDCs interests, particularly with  respect to effectively underpinning Mode 
4 commitments? 
17. We are ready to consider all proposals by LDCs for future disciplines on domestic regulation, 
for example relating to the mutual recognition of qu alifications, but are conscious that progress may 
be difficult to achieve where this depends on agreem ent among a wide range of competent authorities.  
We are also prepared to consider appropriate flex ibilities for LDCs in respect of any disciplines that 
may be agreed. 
6. How can Members implement a notification m echanism, that effectively induces specific 
information on the above aspects? 
18. The EC would be ready to take part in a no tification mechanism, administered by the WTO 
Secretariat under the auspices of the Special Session  of the CTS, which required Members to report 
regularly on activities and measures undertaken in pursuit of the LDC modalities. 
B. P
ARAGRAPH 7 OF THE MODALITIES : APPROPRIATE MECHANISMS FOR EFFECTIVE ACCESS FOR 
LDC  EXPORTS .  
1. Key to paragraph 7 is the development of an appropriate mechanism with a view to 
achieving full implementation of Article IV:3 of the GATS (e.g. LDC participation in 
services trade).  Such mechanisms can take  various forms, including preferential 
mechanisms, that effectively ensure mark et access for LDC exports.  Quotas or 
automatic recognition serve as examples in this context. 
Is each of the above elements being implemente d? If so how? What more can be done to 
better implement them? 
19. In keeping with Article IV of the GATS, the EC believes that “special priority” should be 
given to LDCs in terms of commitments in sectors and modes of supply that reflect their particular 
interests.  The EC has attempted to do this in its  offers and is ready to consider further specific 
requests that may be made. TN/S/W/54 
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 20. The EC considers that quotas for LDCs are unlik ely to be an effective option.  To introduce 
quotas for LDCs would appear to contradict the principle of MFN treatment enshrined in the GATS.      
2. How have requests to LDCs taken particular account of the serious difficulty LDCs have 
in accepting commitments.  Notwithstanding th e bilateral and closed information nature 
that requests take, the LDC group invites Me mbers to report the requests they made to 
LDCs and how they took account of LDC speci fic development concerns in this context. 
21. The EC invited LDCs to make commitments in  only two sectors out of a list of 5, plus 
horizontal commitments in Mode 4.  The list of sectors focused on key infrastructure services which 
can make an important contribution to developm ent.  However, the EC acknowledges that such 
sectors generally need to be liberalized carefully and progressively over time, taking account of the 
regulatory environment and other factors.   
3. Have initial and revised offers by Members improved existing commitments or offered 
new commitments in sectors/modes of export interest to LDCs?  Members are invited to 
report on their offers, and which parts of th em effectively implement Article IV and the 
LDC modalities in this context. 
22. The EC’s initial and revised offers make s ubstantial improvements on existing commitments 
across a wide range of sectors and in all m odes of supply.  As indicated above, these new 
commitments cover areas of export interest to LDCs in Modes 4 and 1.  They are also relevant to other aspects of Article IV and the LDC Modalities, for example commitments in advertising, publicity, distribution services and maritime transport help to provide access to distribution channels 
and information networks and indeed to technology.  
23. The EC considers that commitments by LDCs also  have an important role to play in the 
operationalisation of Article IV.  In particular , domestic capacity building and access to technology 
can be strengthened by attracting companies with  relevant expertise from developed countries.  
4. What other types of mechanisms could be ut ilised to implement each of these elements? 
When can Members begin to develop these mechanisms? 
24. The EC encourages all Members to make commitments in areas of particular interest to 
LDCs.  This may be taken forward in the b ilateral negotiations a nd through complementary 
benchmarking approaches. 
5. How can Members implement a notification m echanism, that effectively induces specific 
information on the above aspects? 
25. The Special Session of the CTS could invite the WTO Secretariat to introduce such a 
mechanism.  TN/S/W/54 
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 C. PARAGRAPH 8 OF THE MODALITIES : MEASURES AIMED AT INCREASING LDC  PARTICIPATION 
IN TRADE IN SERVICES .  
1. Strengthening programmes to promote investment in LDCs, with a view to building 
their domestic services capacity and enhancing their efficiency and export 
competitiveness. 
2. Reinforcing export/import promotion programmes 
3. Promoting the development of LDCs’ infrastructure and services exports through: 
a) training, b) technology transfer, c) enterprise level actions and schemes, d) intergovernmental cooperation programmes and,  e) (where feasible) financial resources  
26. The EC seeks to develop domestic services and trade capacity through its Country and 
Regional Strategy Programmes which take an integrat ed approach to trade and development to ensure 
that trade takes place within clear development objectives determined by the partner countries and 
regions themselves.  The EC tends therefore to  tailor its programmes to the specific needs of 
individual countries rather than through a general strategy for LDCs as a group.  Depending on the 
priorities of the country concerned, there may be a focus on such areas as infrastructure development, 
support for SMEs, financial sector reform, regulator y or environmental conditions etc.  The EC’s 
Country and Regional Strategy Papers  may be seen on the EC’s website. 
27. The EC is conscious that not all of its C ountry and Regional Programmes cover services or 
trade related investment issues.  There is room  for increased awareness both amongst EC delegations 
and their negotiating partners of the role that servi ces and investment can play in development and of 
the particular strategies that might be incorporat ed into Country and Regional Programmes to promote 
this objective. 
28. The EC also promotes investment through certa in special facilities such as PROINVEST 
which works with investment agencies, chambers  of commerce, financial institutions and other 
agencies in the ACP countries to build capacity a nd promote technology tran sfer and partnerships 
with enterprises in developed countries. 
29. A number of EC Member States have investme nt and trade promotion programmes which, for 
example, encourage partnerships between enterpri ses to facilitate technology transfer or between 
investment agencies to exchange best practice.    
30. The EC also offers a range of investment financing instruments through the European 
Investment Bank both to domestic enterprises in LDCs and to EU companies.   
31. Apart from financial and technical assistance the EC seeks to promote an investment climate 
that encourages responsible investment by EU co mpanies.  EU Member States encourage their 
companies to follow the OECD Gu idelines on Investment and Multina tional Enterprises, a benchmark 
for good investment practice.  As signatories, mo st EC Governments have  set up National Contact 
Points that are responsible for the implementation of  the Guidelines.  Some Member States link their 
export credit mechanism to the OECD guidelines.       TN/S/W/54 
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 4. Improving the access of LDCs’ services and s ervice suppliers to distribution channels 
and information networks, especially in secto rs and modes of supply of interest to LDCs. 
What are Members doing in this context, what are their experiences, relevance of 
competition etc. 
32. The EC’s initial and revised offers make rele vant market access co mmitments as already 
indicated (e.g. in advertising, pu blicity, consultancy services, distribution services etc).  In so far as 
LDCs experience difficulties in taking advantage of these commitments, the EC is keen to explore all 
possibilities for enhancing the competitiveness of LD Cs, for example through supply-side measures 
that may be possible under its various development assistance programmes.    
 
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